EU to seek COP28 deal on phasing out fossil fuels

European Union countries are preparing to push for a global deal on phasing out fossil fuels at the United Nations COP28 climate summit which begins in November, a draft of the EU's negotiating position showed, as per Hydrocarbonprocessing.

Diplomats from the bloc's 27 member states are drafting their position for the summit in Dubai, where nearly 200 countries will try to strengthen efforts to rein in climate change. "The shift towards a climate neutral economy will require the global phase-out of fossil fuels and a peak in their consumption already in the near term," a draft of the EU's negotiating stance, seen by Reuters, said.

Countries have never before agreed in UN climate negotiations to gradually stop burning all CO2-emitting fossil fuels, despite this being the main cause of climate change. "Unabated" refers to fossil fuels burned without using technologies to capture the resulting CO2 emissions. The word was in brackets in the draft EU text, indicating that countries have not yet agreed on whether to include it.

EU diplomats hope a deal could be clinched at COP28 - but expect to meet resistance from economies reliant on income from selling oil and gas. The EU document, which is still being negotiated and could change before it is due to be finalized in October, said the energy sector should be largely free of fossil fuels "well ahead of 2050" because cost-effective, CO2-free energy sources are already available.

A proposal to phase out CO2-emitting fossil fuels won backing from more than 80 countries at last year's UN climate summit, but Saudi Arabia and other oil and gas-rich nations opposed it. Some countries with fossil fuel-heavy economies want to focus on developing technologies to capture CO2 emissions, rather than reducing the use of fossil fuels. Disagreement over this issue meant G20 countries' ministers could not agree to curb fossil fuels at a meeting last month.

Some EU countries seeking faster CO2-cutting action want to agree limits on CO2 capturing technologies - to restrict their use to sectors without alternatives, diplomats said. While not legally binding, the idea behind a global deal to gradually quit fossil fuels is to create a powerful "north star" to guide future climate negotiations, government policies and investments towards energy sources and technologies that do not contribute to heating the planet.

We remind, Russia's seaborne diesel and gasoil exports in August rose by 2% from a month earlier to about 3.85 million metric tons on healthy fuel production, data from traders and LSEG showed. Idle primary oil refining capacity for August was estimated at 3.1 million metric tons versus 2.458 million metric tons in July, Refinitiv Eikon data and Reuters calculations showed.

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The Indian government will cut the windfall tax on petroleum crude to 6,700 rupees (USD81.03) per metric ton from 7,100 rupees starting on Saturday, according to Reuters.

The government will also raise the windfall tax on diesel to 6 rupees per liter from 5.50 rupees, the notification said.

The windfall tax on aviation turbine fuel will increase to 4 rupees per liter from 2 rupees, while the levy on petrol will remain at zero, according to the notification.

In August, the government raised the windfall tax on petroleum crude to 7,100 rupees per ton from 4,250 rupees per ton.

India imposed the windfall tax on crude oil producers in July last year and extended the levy on exports of gasoline, diesel and aviation fuel after private refiners wanted to make gains from robust refining margins in overseas markets, instead of selling at home.

We remind, India's imports of Russian oil fell in August to a seven-month low as refiners curbed purchases due to planned maintenance outages at some plants and lower discounts for Russian grades. However, oil imports from Saudi Arabia surged to a multi-month high, according to preliminary data from Kpler and Refinitiv trade flows. Refiners in India have been snapping up discounted Russian oil after some Western buyers shunned purchases over Russia's full-scale invasion of Ukraine in February last year.

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Russia's seaborne diesel and gasoil exports in August rose by 2% from a month earlier to about 3.85 million metric tons on healthy fuel production, as per Reuters.

Idle primary oil refining capacity for August was estimated at 3.1 million metric tons versus 2.458 million metric tons in July, Refinitiv Eikon data and Reuters calculations showed.

After the full EU embargo on Russian oil products took effect on Feb. 5, Turkey remains the main destination for Russian diesel and gasoil seaborne exports, reaching about 1.56 million metric tons in August, or about 40% of total month supplies, LSEG data shows.

Diesel loadings to Brazil from Russian ports, mainly from the Baltic port of Primorsk, could decline in August to nearly 550,000 metric tons after 650,000 metric tons in July, according to the shipping data.

Last month, about 880,000 metric tons of Russian diesel were heading to African countries, mainly to Togo, Tunisia, Ghana, Morocco and Libya. Another 360,000 metric tons of diesel from Russia in August was destined for ship-to-ship transfers near the Greek port of Kalamata and Malta, LSEG data shows.

The final destinations for these cargoes are not yet known, and traders said they expected them to be in Turkey or the Middle East countries.

All the shipping data above are based on the date of cargo departure. About 220,000 metric tons of diesel loaded in Russian ports in August does not yet have a confirmed destination.

We remind, India's imports of Russian oil fell in August to a seven-month low as refiners curbed purchases due to planned maintenance outages at some plants and lower discounts for Russian grades. However, oil imports from Saudi Arabia surged to a multi-month high, according to preliminary data from Kpler and Refinitiv trade flows. Refiners in India have been snapping up discounted Russian oil after some Western buyers shunned purchases over Russia's full-scale invasion of Ukraine in February last year.

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BASF has commenced construction of its syngas plant at the Verbund site in Zhanjiang, China. This world-scale syngas facility, fully integrated into the Verbund site, is scheduled to start up in 2025, said the company.

BASF will adopt unique process concepts in the syngas plant to reduce carbon emissions compared to conventional syngas plants, contributing to BASF’s sustainability goals.

The state-of-the-art facility will produce syngas and hydrogen for captive use within BASF’s production Verbund. The production technologies deployed in the syngas plant will mainly utilize CO2 off-gas, a by-product of the ethylene oxide process and excess fuel gas from steam cracker operations, to manufacture syngas. “The technical concept of this syngas plant is the first of its kind in China, underscoring our commitment to achieving climate neutrality by 2050. Compared to other technologies, these innovative process technologies help to reduce the Zhanjiang Verbund site’s direct CO2 emissions and particularly lower the carbon footprint of our oxo and ethylene oxide products,” said Bir Darbar Mehta, Senior Vice President of Petrochemicals Asia Pacific at BASF.

Besides the above-mentioned raw materials, the syngas plant can utilize further feedstocks, ensuring more reliable production. Electricity will be supplied by the site-wide grid which is expected to be powered with 100% renewable energy by 2025.

We remind, BASF, Huntsman and their Chinese partners in the joint venture Shanghai Lianheng Isocyanate Co (SLIC) complete the planned separation of their joint MDI production in Caojing. The two MDI (diphenylmethane diisocyanate) plants at the Caojing site in China will be operated independently by the two companies in the future. Huntsman, together with Shanghai Chlor-Alkali Chemical, and BASF, together with Shanghai Hua Yi (Group company) and Sinopec Shanghai Gaoqiao Petrochemical, will each take over one of the MDI plants.

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MRC --Saudi Basic Industries Corp said it had agreed to sell subsidiary Saudi Iron and Steel Company (Hadeed) to the Public Investment Fund (PIF) for an enterprise value of 12.5 billion riyals (USD3.33 bn), said the company.

The transaction is expected to close before the end of the first quarter of 2024, and proceeds from the sale will be used to support SABIC's growth in the chemicals industry, according to a company statement to the stock exchange.

The final sale price will be disclosed closer to the completion date. SABIC, one of the world's biggest petrochemical companies, reported a massive slump in its second-quarter net profit on lower average sales prices and weaker demand. It said it wants to focus on core businesses as the rationale for the divestment.

The fair valuation of Hadeed's net assets is expected to result in a non-cash loss of between 2 to 2.5 billion riyals in Q3 earnings, SABIC said.

We remind, Saudi Arabia's Yanbu National Petrochemical Company (Yansab) said the temporary shutdown of its plants, which started on August 14, 2023, will continue for another 11 days. Currently, the necessary repairs are being carried out to resolve the technical glitch, Yansab said in a statement to the Saudi stock exchange on Monday. The petrochemical company is a subsidiary of the Saudi Basic Industries Corporation (SABIC).

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